Deutsche Bank’s earnings 1st quarter 2022

Deutsche Bank on Wednesday reported its seventh consecutive quarterly result, but warned that the current environment is “challenging” and “cost pressures have intensified.”

The German lender said its net profit reached 1.06 billion euros ($ 1.13 billion) in the first quarter of the year. Analysts had predicted a figure of 1.01 billion euros for the three-month period, according to data from Refinitiv.

“Deutsche Bank is more stable and robust than it has been for many years. Our figures for the first quarter clearly show this,” CEO Christian Sewing said in a letter to staff on Wednesday. But the German bank noted in its earnings report that the outlook for this year was challenging.

“Despite the uncertainty associated with the war in Ukraine and the remaining challenges associated with the COVID-19 pandemic, we intend to continue to execute our strategy in a disciplined manner with a focus on improving sustainable profitability by increasing revenue in our “core banking, while we remain disciplined in terms of costs and capital, but the current environment is increasingly challenging and cost pressures have intensified,” the bank said.

Rising inflation, and how central banks may react to it, has rattled markets recently and caused considerable uncertainty for companies, including banks. A sudden change in monetary policy can affect banks’ performance.

‘A wall of worries’

James von Moltke, CFO of Deutsche Bank, told CNBC’s Annette Weisbach: “It’s a wall of worries at the moment.”

“There are a number of different features out there, and of course the war in Ukraine dominates because it dominates the news, but it should not overshadow the fact that there is still some pressure, whether on supply chains, the Chinese response to Covid and other features,” he said. said.

Other key figures for the quarter:

  • Revenue increased 1% from a year ago to 7.33 billion euros.
  • Provisions from credit losses amounted to 292 million euros, compared to 69 million euros a year ago.
  • The CET 1 capital ratio, a measure of banks’ solvency, was 12.8% from 13.7% a year ago.

All Deutsche Bank divisions delivered better results compared to a year ago. Within investment banks, fixed income and currencies reported that revenue was 15% higher.

Commenting on the results, von Moltke added that “these trends are likely to continue into the second quarter.”

“There is still uncertainty in the financial markets and some volatility out there, our goal is to support our customers in this environment,” he said.

Russia exposure

On March 11, Deutsche Bank said it would wind up its Russian operations – a major U-turn compared to its original position when the war broke out in Ukraine. The German bank said it joined a host of international peers in leaving the country in response to its invasion of Ukraine and consequent operational restrictions.

As such, Deutsche Bank said it reduced its exposure to Russia during the first quarter. Gross lending exposure decreased by 5% to € 1.3 billion and net lending exposure decreased 21% to € 0.5 billion during the quarter. It also said it was “unreservedly implementing” Western sanctions against Russia.

The German lender surprised the markets at the end of 2021 with a profit of 145 million euros, as investors had estimated a net loss for the last quarter of the year.

Shares fell 5% in early European trading on Wednesday.

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